Bulgaria’s economy

In a rough region

Once Bulgaria hoped to be like Greece; now it just hopes to survive

ACCORDING to Ivan Krastev, a Bulgarian analyst, optimistic forecasters had the big hope 20 years ago that Bulgaria might become like Greece. That is to say, “moderately democratic, but moderately corrupt”. Now, he says, they hope that Greece may become like Bulgaria: poor, but financially disciplined and not making too big a mess for others.

So far Bulgaria has weathered the economic and euro crisis. Unemployment has crept up to 12%, but that is half the levels in Greece and Serbia. Over a million Bulgarians are thought to live abroad, working especially in Spain and Greece. Some have lost their jobs and come home, but the value of remittances sent back through banks has actually risen. In 2008 the official figure for remittances was €694m; last year it was up to €774m.

Bulgaria's GDP grew by a modest 1.7% in 2011 and is expected to slow this year. A recent study suggests that as much as 30% of the economy is unrecorded. Bulgarians are also miserable. A poll by the Open Society Institute found that more than two-thirds of them expect the economy to stay the same or deteriorate in the next 12 months; and fully 56.7% find the situation in the country “unbearable”.

Bulgaria is the poorest country in the EU. Average wages are €3.50 an hour and average monthly salaries are just €360. As 10% of Bulgarian exports go to Greece and Greek banks hold 40% of all loans, it is hardly surprising that Bulgarians are on edge. What makes them especially nervous, says Vassil Vassiliev, a businessman, is their past experience that, whatever happens in western Europe, “comes here a year or two later.”

Mr Vassiliev sends organised groups of workers to other EU countries, especially for seasonal work. He worries that political pressure on companies to replace his workers with the domestic unemployed could affect his business and thus Bulgaria's economy. Mr Vassiliev thinks the country needs a plan to steer away from excessive dependence on the euro zone.

In one area the market is already changing. The crash of 2008 left huge numbers of unsold holiday flats along the Black Sea coast. When the builders went bust, many of these ended up in the hands of banks. Since then, middle-class Russians have been buying them, says Tzvetelina Borislavova, a banker left with thousands of flats.

Many Bulgarians who do not like the government of Boyko Borisov, a populist prime minister (who once lived with Ms Borislavova), fret about fraying democracy. Parliament has become a “rubber stamp”, complains Borislav Tsekov, an analyst, echoing a belief that business lobbies secure laws favourable to themselves. Several thousands took to the streets recently to protest against a law on forests that was welcomed by builders of ski resorts. The government is backtracking.

Perhaps most worrying is the state of the media. Mainstream newspapers are owned by banks or powerful companies. There is little investigative reporting. Advertising by the government and by state-owned companies is a big source of revenue for newspapers; because of that, self-censorship is the order of the day, argues Valeri Tsenkov, an editor. But Nikolay Mladenov, Bulgaria's foreign minister, says that what he finds most annoying is “the continual decline in the quality of journalism”. He does not see the link with self- censorship.